Monday, July 24, 2017

Opposing Sides Lay Out Q Deal Arguments Before Ohio Supreme Court

The Q Deal referendum coalition, after signatures were rejected at City Hall (5/22/17).

Last week, lawyers for both Cleveland Law Director Barbara Langhenry and City Council Clerk Patricia Britt, as well as lawyers representing Cleveland taxpayers, filed briefs with the Ohio Supreme Court in a case which could determine the outcome of the Quicken Loans Arena renovation deal.

At issue is whether or not Pat Britt must be compelled to verify more than 20,000 petition signatures that her office received in May. The petitions, circulated by Greater Cleveland Congregations and other groups opposed to the Q deal, sought a referendum on city ordinance 305-17. That ordinance was passed as an emergency measure in late April and was signed into law the next day by Mayor Frank Jackson. It amended a complex financial arrangement between the City and the County, originally passed in 1992 to finance the construction of the the Gateway Complex, and committed future admissions tax revenue toward the arena renovation.

The clerk’s office, via Deputy Allan Dreyer, rejected the petition signatures on May 22, advising in a memo that a referendum seeking repeal of 305-17 was unconstitutional because it would impair an “already executed and binding contract.”

Langhenry then filed suit against Britt to compel her to accept the signatures. The maneuver was announced by Frank Jackson and Council President Kevin Kelley at a City Hall press conference and was positioned as a presentation of “equally valid” legal arguments before an impartial court that would resolve the matter quickly. Lawyers for Cleveland taxpayers successfully intervened in the case, and have presented their briefs alongside Langhenry’s.

The legal argument put forth by Langhenry’s team is that the constitutionality of the referendum is irrelevant, and in fact not the Ohio Supreme Court’s business. The court should compel Britt to verify the petition signatures because it is the Clerk’s duty to do so, as outlined in the Cleveland City Charter. The Charter also explicitly states that the ordinance, despite its emergency status, is clearly subject to referendum. Langhenry’s lawyers argued that 305-17 “constitutes a legislative [as opposed to an administrative] act,” and “does not fall within the scope of the limited exceptions set forth in [the Charter.]”

The ordinance was not passed, in other words, “for the immediate preservation of the public peace, property, health or safety.” Nor was it passed to provide for “the refinancing of bonds, notes or other securities of the city.” (Those emergency ordinances would not be subject to referendum. All other emergency ordinances are.)

Lawyers for Cleveland taxpayers—Subodh Chandra and Peter Pattakos*—argued much the same. They, too, said that the constitutionality of the referendum (in keeping with Ohio legal precedent) should only be addressed after a vote had taken place. And even if the Constitution’s contracts clause were in play, they argued, it would only restrict the passage of laws that impair contracts, not their repeal. Furthermore, the contracts clause only applies when reasonable expectations of contracting parties are disrupted.

“Everyone involved here knew that this deal was subject to the referendum process, just like every proposed public improvement project has been in Ohio for more than 100 years,” Pattakos wrote Scene in an email, paraphrasing his firm’s brief. “The contract clause was not intended to allow elected officials to commit tax dollars to new projects against their constituents' will and then thwart the public's right to approve the project by rushing into contracts before the referendum process has a chance to play out.”

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Sam Allard / Scene

That’s the crux of the taxpayers’ argument. In the language of the brief: “[A prior court finding] does not grant cities, carte blanche, a right to start making their own constitutional determinations regarding referendums or other voter initiatives prior to their enactment.”

Britt’s legal team argued, on the flipside, that Cleveland taxpayers have no right to referendum because petitions were filed after the ordinance’s “effective date.” They argued [erroneously] that once an emergency ordinance goes into effect, referendum petitions cannot be processed.

“By requiring two-thirds of Council to approve the emergency and a shorter effective date than 30 days,” the brief reads, “the Charter provides a reasonable safeguard against legislative abuse by making it difficult for Council to pass every ordinance as an emergency to avoid a referendum.”

Britt’s team argued that even if petitions had been filed before the ordinance’s effective date, the referendum would be void ab initio [from the start] because it is unconstitutional. Britt, then, via Dreyer, had the authority to reject the signatures on constitutional grounds, they argued. Moreover, the lawyers wrote that referendum powers apply only to legislative acts, and 305-17 relates to an administrative act. (Langhenry’s team rebutted that claim.)

Thursday, supporters of the Q Deal filed Friends of the Court briefs to argue on behalf of Britt and the arena renovation. Lawyers for the local laborers’ union (310), the Downtown Cleveland Alliance, the Cavaliers Operating Company and a slew of prominent business leaders advanced various economic rationales.

“When the city enters into a development agreement, no one benefits from a legal scheme that allows third parties to invalidate the agreement after the fact,” read the brief from Cleveland’s business community. “The court should not countenance a legal scheme that increases the risk, and thereby the cost, of economic and financial transactions. No one benefits from such a scheme.”

The Cavs’ brief called the referendum a “shakedown,” a ploy intended to milk Dan Gilbert for additional community benefits. (This references the GCC’s call for a “dollar for dollar” pledge into a Community Equity Fund). It also claimed, in an echo of Britt’s lawyers, that the signatures were a “nullity, rendered moot” by their untimely submission. The Cavs also attached a letter from the NBA advising that if construction on the arena did not begin by September 15, Cleveland would no longer be considered as a host city for the 2020 or 2021 NBA All-Star games.

A brief filed by attorney Andrew Mayle, representing an organization called Property Owner’s Network, replied to the supporters’ claims. We quote it at length here:

“Various amici supporting [City Council Clerk Pat Britt] assert—citing nothing—that permitting a referendum on the disputed Cleveland ordinance would increase the costs of contracting in this state and make economic development projects ‘impossible. Not so. The amici offer no empirical data supporting their claims. But even if the data existed—which it does not—the overall societal benefit of preserving the constitutional power to referendum outweighs the perceived financial gain for some flowing from any given development project…

“In truth, the hope in reserving the right to referendum is that the right is rarely exercised. That is, the more potential for a referendum promotes enactment of sound—rather than wasteful—public policy backed by the will of the majority of the electorate. Thus, the right to referendum increases—not decreases—overall efficiency through direct public accountability.

“This is one reason why most ordinances are enacted without ever being subjected to referenda. But in those rare cases where legislation is opposed to the point where enough electors are willing to circulate, sign, and vote for a referendum vetoing a recently-enacted ordinance, no city clerk, nor even the Supreme Court of Ohio, have the power to suppress the vote before it occurs.

“Granted, in any particular referendum election, arguments may be made pro or con as to how a person should cast their vote. But the merits of the proposed referendum in Cleveland are not before this court of law. And therefore the business leaders who oppose the referendum should make their economic arguments directly to the voters of Cleveland rather than to this judicial tribunal—whose jurisdiction at this juncture is limited to overseeing [Britt’s] failure to perform her ministerial duties.”